In Morrisroe UK Ltd v HMRC [2015] TC04577 the First Tier Tribunal (FTT) concluded that reliance upon a third party could be a reasonable excuse for failure to make a payment of VAT on time.

Background and legislation

  • Morrisroe UK Ltd (the company) appointed Mr Nair to prepare and submit their VAT Returns and make payments to HMRC.
  • The company had a previous late payment due to cashflow problems.
  • This appeal related to their second late payment which resulted from difficulties experienced by Mr Nair on the due date.
  • HMRC contended that the company's reliance upon Mr Nair could not constitute a reasonable excuse, in accordance with Section 71 VATA 1994, which states that
    • "where reliance is placed on any other person to perform any task, neither the fact of that reliance nor any dilatoriness or inaccuracy on the part of the person relied upon is a reasonable excuse"

The circumstances of Mr Nair

  • Mr Nair lives with his wife, his children and his elderly parents who have multiple health problems.
  • His wife is the main carer for the parents.
  • On the week in question, his wife was away in India.
  • His wife had arranged for professional carers to attend from 11am to 1pm each day, and it was essential that they arrived at this time as if they did not his mother might attempt to cook a meal which would be dangerous.
  • On the day in question, his ten year old daughter was too ill to attend school.
  • On the day in question, Mr Nair repeatedly telephoned his home with no response, and although he did get through to the care agency who told him that the carers were at his home, he decided to leave his office at 12.30pm to check on everything at home, particularly as he was concerned for his daughter.
  • He arrived back in the office at 3pm and submitted the VAT Return but had missed the bank's cut off time to make the payment.

The decision of the tribunal

  • The tribunal agreed that mere reliance on a third party cannot constitute a reasonable excuse.  However, the tribunal also commented that the defence of reasonable excuse is still available if unforeseen events happen to that third party.
  • In other words, the reasonable excuse relied upon is not that the company placed reliance upon Mr Nair, but that Mr Nair had a reasonable excuse.
  • The tribunal agreed that it was reasonable for the company to rely upon Mr Nair, and that Mr Nair had a reasonable excuse as the illness of his daughter was unforeseen.


Up till now, reliance upon a third party has never been considered a reasonable excuse in VAT penalty cases.

This decision gives us a new interpretation of reasonable excuse and it could open up the possibility of further claims for reliance upon third parties where that third party has a reasonable excuse. However, the FTT is not a court precedent: another tribunal does not have to follow a FTT decision.

This particular case has its own specific facts.  There was substantial evidence provided as to Mr Nair's activities and movements on the day in question, and it was ascertained that there were back up plans in place which could not be implemented due to the sudden deterioration of events.  

It is likely that future Tribunals would expect precautions against such events to be taken where possible, particularly for larger companies where another individual could complete the Return and submit the payment.

HMRC have leave to appeal this decision.


Morrisroe UK Ltd v HMRC [2015] UKFTT TC04577